L1 Tokens Crushed in 2025 as SOL, AVAX Drop Over 65%: Report

Layer 1 blockchain tokens suffered extreme depreciation in 2025, with main property shedding as much as 73% of their worth regardless of sustained developer exercise, based on the most recent End-of-Year report from OAK Research.

While Bitcoin maintained relative energy all year long, various Layer 1 tokens skilled brutal sell-offs that uncovered structural weaknesses in tokenomics and market positioning.

The report reveals a decisive shift from hypothesis to elementary worth creation, with the market punishing protocols unable to indicate real financial exercise.

User Reallocation Masks Market Stagnation

The 12 months witnessed large person redistribution somewhat than total progress, with whole Monthly Active Users declining 25.15% throughout main chains, based on the report’s blockchain metrics evaluation.

Solana suffered the steepest decline, shedding almost 94 million customers (a drop of greater than 60%), whereas BNB Chain virtually tripled its person base by capturing fleeing contributors.

Layer 2 networks skilled comparable divergence. Base demonstrated the strongest progress, with TVL rising 37.2% to $4.41 billion, based on the report, solidifying its place via Coinbase’s distribution benefit.

Meanwhile, Optimism noticed TVL contract 63%, dropping from almost $2 billion to $786 million as capital rotated towards extra aggressive opponents.

Token Performance Reflects Brutal Reality

Price motion instructed an unforgiving story. Among main Layer 1 tokens monitored since January, solely two completed optimistic:

• BNB gained 18.2%.
• TRX rose 9.8%.

The the rest suffered catastrophic losses, with Solana dropping 35.9% and newer entrants like TON and AVAX falling over 67%.

Layer 2 tokens fared even worse regardless of technical progress.

The report paperwork that Optimism and zkSync Era each posted declines exceeding 84%, whereas Polygon and Arbitrum fell by greater than 73%.

Only Mantle managed a modest 8.3% achieve, attributed to concentrated provide management somewhat than elementary energy.

The report identifies a number of converging forces behind the decline. They could be summed up into three most important causes:

• Overleveraged tokenomics with steady unlock schedules.
• Lack of credible value-capture mechanisms linking community utilization to token demand.
• Institutional desire for Bitcoin and Ethereum over smaller-cap alternate options.

Developer Activity Diverges From Price

Despite value carnage, developer activity remained robust throughout choose ecosystems, based on knowledge from Electric Capital cited in the report.

The EVM Stack maintained the biggest developer base, with 17,473 whole contributors (up to date), together with 5,405 full-time builders, representing over 32% of exercise.

Bitcoin posted the strongest two-year progress in full-time builders amongst main ecosystems, rising 90.5% to 1,003 contributors.

Solana and the broader SVM Stack grew 75.8% over two years to 4,578 full-time builders, demonstrating sustained technical ambition regardless of brutal token efficiency.

Overall, the developer ecosystem is rising, however the disconnect between their exercise and token costs revealed what the report phrases as “market maturation.”

Teams continued constructing via down cycles, however speculative capital now not rewarded infrastructure with out clear paths to income technology.

Revenue Meta Emerges as Criterion

The elementary lesson of 2025 turned inescapable, based on the report’s financial evaluation. The report asserts that protocols with out credible income streams are vulnerable to extinction.

The business pivoted decisively towards the “income meta,” the place precise money flows mattered greater than narrative.

Stablecoin issuers dominated income technology, accounting for 76% of revenue amongst prime protocols.

Tether and Circle mixed generated $9.8 billion yearly, whereas derivatives platforms like Hyperliquid added $1.1 billion via sustainable fee-based fashions.

The report additionally identified a harsh fact that generic Layer 1s and Layer 2s missing differentiation couldn’t compete.

Networks required 10x enhancements in velocity, price, or safety to justify impartial existence.

Outlook Remains Challenging

Looking towards 2026, infrastructure tokens face continued headwinds regardless of regulatory readability in key markets, the report concludes.

The mixture of high inflation schedules, inadequate demand for governance rights, and focus of worth seize in base layers suggests additional consolidation forward.

The total sentiment in the altcoin market heading into 2026 stays cautious, notably as they’re experiencing a steep decline by no means seen earlier than.

Protocols that generate significant income might stabilize, however they continue to be topic to Bitcoin’s volatility and protracted unlock stress from early buyers.

For present Layer 1 tokens, the report asserts that survival relies on Ethereum and Solana, and that renewed institutional adoption would possibly restore hope.

Without management from market majors, generic infrastructure tokens will proceed to pattern towards irrelevance as capital concentrates in protocols that present financial worth somewhat than technological novelty alone.

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